Online Buyer Behaviour

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ONLINE BUYER BEHAVIOUR


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Buyer Behaviour

Effective strategic marketing requires business

planners to be almost obsessive about

understanding the needs of their customers.

Brennan et al (2003)

The unique characteristics of the Internet offer

new ways for consumers to interact with oneanother, organizations and the wider e-

marketplace. Cotte et al (2006)


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Understanding Buyer Behaviour

Marketing StimuliProduct / Price / Place / Promotion / etc

Other StimuliSocietal / Technological / Economic /

Political / Legal

Buyers Black BoxBuyer characteristics Buyer decision process

Buyers ResponseProduct / brand choice

Dealer / web site choice

Purchase timing

Frequency

Amount


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CULTURAL VALUE FRAMEWORK FOR

WEB DESIGN

INDIVIDUALCOLLECTIVISM: reflects whetherindividual is more important than the group

POWER DISTANCE: reflects the societys

recognition level of power, authority andhierarchy.

UNCERTAINTY AVOIDANCE: reflects the

relative value place upon the security andstructure as opposed to vagueness and risk inthe society


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Consumer buying decision process

Information search

Problem recognition

Evaluation of alternatives

Post-purchase behaviour

Purchase decision


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PROBLEM RECOGNITION

Stimulus that trigger need recognition may comefrom either online or offline sources.

Two scenario where user could be made aware ofa problem online are:

The problem is generic, ongoing one for whichpeople are always receptive to a solution. Eg.People who are trying to lose weight will alwaysbe amenable to an advert promoting food

products that is low fat, but tasty. Typing keywords into a search engine can generate relevantresults that illustrate the problem.


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The second is one that other media can

address, but not as efficiently or effectively as

the internet. This is because user choose to be

on the web , and they select the web sites

they visits (self segmentation). With the

correct use of target marketing web sites

visitors can actually be made aware of aproblem they might have but not have

realised.


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INFORMATION SEARCH

Key information triggers that leads to a purchasesuch

Incentives, detailed product information,discussion groups or independent customerreviews.

FAQs, site index, product index, product searchfunction

Online communities may have influentialmembers who are opinion leaders and theirviews may sway the community in positive/negative way towards a product or its supplier


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EVALUATION OF ALTERNATIVES

Involves the bringing together and analysis of

the information gathered in search stage.

Eg some websites allow you to save info on

products and then show them on one page.


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PURCHASE DECISION

Done by using the concept of e commerce.

Facilitated by functionalities: shopping cart,

check-out and payment procedures.

Purchase occcurs in two levels

First: product and other mix elements that

combine to provide the total offer with

branding being a critical deciding factor in

consumer perception.


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Second: decision to purchase from a particular

online vendor .

Things to be taken care of: Online security,

management of personal data &efficient

distribution process, easy return policy or

money back gurantee


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POST PURCHASE EVALUATION

Begins as soon as the transaction is completed

with customers expecting to receive e mail

confirmation of the order within seconds and

a customer reference for order trackingpurpose.


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ONLINE CUSTOMER EXPECTATIONS

Facilitation in their research for the products orservice that most suitably meets their wants andneeds.

Price search and comparison much easier

24*7 convenience

Minimization of transaction cost eg time spendtravelling to store to purchase a product

Speed of product delivery

Efficient service


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Online Buyer Behaviour

Although all steps in the consumer buying process

might be affected by the Internet, its biggest

impact is in the decision making process at the

research stage. (Yahoo! Inc. and OMD 2006)

The study cites three key determinants in the online

information search as:

1. Trusted sites

2. Choice of brands to compare

3. Competitive prices


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The Purchase Behaviour Matrix

In the Internet age, information about products is available from amyriad of off- and online sources. Furthermore, the purchase is

not necessarily made from the vendor who provides the most

significant information.

Purchase behaviour variables for the web enabled customer include:

research purchase fulfillment purchased from

online online home delivery same vendor that provided theoriginal information

online online customer collects different vendor to that which

provided the original informationOfflineliterature

online home delivery same vendor that provided theoriginal information

online offline customer collects different vendor to that whichprovided the original information


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Online Customer Expectations

The Internet gives impetus to the marketers objectivesshifting from helping the seller to sell, to helping thebuyer tobuy.

Customers now expect to be facilitated in their research

for the product that most suitably meets their wants andneeds.

The web is a pull media, meaning that the user, thoseto whom any marketing message is directed, requests

the information rather than having it forced orpushed for the marketer this means the customerchooses which marketing messages they see.


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Online B2C Buyer Behaviour

Two key aspects can be monitored to help assess thatcustomers online behaviour:

1. Explicit behaviour based on:

Data provided by the user; eg. a profile for registration toa site.

Any recorded actions on the site; eg. signing up for an e-newsletter or placing an order.

2. Implied behaviour based on data derived from theobservation of a users actions as they interact withthe site.


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Online B2B Buyer Behaviour

Electronic communications not new Internet

preceded by electronic data interchange (EDI).

New technology accelerated adoption of:

Electronic exchange mechanisms

E-supply chain management

Web presence must appeal to all members of decision

making unit.

Web now considered to be an essential tool of the

trade in purchasing process.


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Web Site Analytics

The online marketer must be aware of how the use oftechnology can help collect data that facilitates the

analysis of online behaviour.

E-metrics vary depending on site objectives:Site objective Potential e-metrics

Increase sales Sales value per visitor

Average order size

Conversion rate (sales / visitors)

Provide after-salesservice

Visits to FAQ page

Page downloads (eg instruction manuals)

Generate sales leads Conversion rate (leads / visitors)

Discount vouchers download

Develop brand Number of visits/visitors

Depth of visit (how many pages accessed)


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POTENTIAL PROBLEMS WITH e

metrics

Web logs

cookies

Random spiders

Frames

Dynamic or flash sites

Sharing security certificates


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Web logs: If a file is saved in cache after the first visit tothe site, the server never sends the requests to thewebsite hosts server if its requested by second user. Soonly one visitor is shown.

If an ISP is using 10 different proxy servers handling therequests originating from a specific town/city, and auser requests 10 pages from a particular website atdifferent times. Each request is handled by any of 10

proxy server. This means web log of the site will show10 users have requested 10 pages instead of one.


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COOKIES:Information stored on a users computer by a Website so preferences are remembered on future requests.

Cookies are passed from a Web server through a Webbrowser to the users hard drive. This information isessential for many of the features taken for granted on theWeb, such as shopping carts and personalized portals.

Privacy advocates have raised concerns over the role ofcookies in online advertisements. They fear that largecompanies could piece together information which couldbe used against individuals, especially if offline informationis merged with online information.


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Cons of cookies

Privacy: The main concern for most users is privacy. Cookie enabledweb browsers keep track of all the websites you have visited. Thismeans that with permission (or not in Googles case), third partiescan access the information stored by these cookies. These thirdparties can be advertisers, other users, or even the government insome cases.

Security: Cookie security is a large problem. The concern is thatmany security holes have been found in different browsers. Some ofthese holes were so serious that they allowed maliciouswebmasters to gain access to users email, different passwords, andcredit card information.

Secrecy: Although third party cookies can be blocked through yourbrowser settings, most people dont have the technical expertise todo this. Most browsers purposely make it difficult to find thissetting in order to prevent you from turning them off. No cookiesmean no data, which in turn means less money.


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Random spiders: A spider is an automated programmedesigned to seek information on websites. Search engines use

spiders to gather the data that is used in their algorithms in

order to rank the websites in engines search results. When

spiders visit a web site they show up on the log files as a

normal visitor. If any of these spider visit a website, there

would be artificial inflation of visitor number.

Email harvester: random spider used for nefarious means

which visit websites and records any email address foundwhich are used for spam mailing.

Solution: Spybot


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Frames: They were earlier used as popular

design options for websites. Each page was

made up of multiple files, so they would

increase the number of page load recordedcompared to pages actually seen by the user.


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Dynamic or flash sites: Flash is also utilized to create advertisement banners. Itblends well with the purpose of an ad, as catchy messages and moving objectswill certainly draw attention of the viewers and might as well take them to theactual resource for which the ad is made.

As a Flash website intro increases the size of the homepage file, it takes muchlonger to load. Can you really expect your site visitors to wait that long and bepatient enough to read the vivified sales pitch!

Music and sound files embedded into the Flash videos further increase thedownloading time. On the top of it, many of your site viewers would not likebeing forced to listen to the sounds or music as a part of website browsing.

Images, graphics, and animation cant be indexed by the search engines.Moreover, search engines have difficulty in adequately indexing the textembedded in the Flash movie. Hence, the use of a Flash intro disturbs thesmoothness of search engine optimization of the site.


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Sharing security certificates: When a user makes adecision to purchase a product online they will click on a link

that confirm that decision. on all legitimate e commerce

websites, this will take the user to a secure part of the

website. This part of the website is designated as having a

secure socket layer (SSL) making it secure for credit cards

payments to be transmitted safely.

Such processes are often hosted on different server and

recorded on different log files.

The analysts must be aware of this to monitor user activity in

vital part of their website visit-the purchase


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Behavioural & Contextual Targeting

Industry split on definitions,current status:

Contextual targeting Behavioural targeting

Less complexno user date

required.

On-site ads in context with

content of page.

Behaviourprior or post of

the user of no significance to adsposted.

More complexuser data

required.

Based on offline behavioural

segmentation; eg benefits sought,

purchase occasion, usage

frequency etc.User data collection strategic

activity.


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DATA BASE MARKETING

Database marketing is a form of direct

marketing using databases of customers or

potential customers to generate personalized

communications in order to promote aproduct or service for marketing purposes.

The method of communication can be any

addressable medium, as in direct marketing.


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The distinction between direct and database marketingstems primarily from the attention paid to the analysisof data.

Database marketing emphasizes the use of statistical

techniques to develop models of customer behavior,which are then used to select customers forcommunications. As a consequence, databasemarketers also tend to be heavy users of data

warehouses, because having a greater amount of dataabout customers increases the likelihood that a moreaccurate model can be built.


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There are two main types of marketing databases, 1)Consumer databases, and 2) business databases.

Consumer databases are primarily geared towardscompanies that sell to consumers, often abbreviated as

[business-to-consumer] (B2C) or BtoC.

Business marketing databases are often much moreadvanced in the information that they can provide. Thisis mainly because business databases aren't restricted

by the same privacy laws as consumer databases.

Growth and evolution of database


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Growth and evolution of database

marketing

The growth of database marketing is driven by

a number of environmental issues. Fletcher,

Wheeler and Wright (1991) classified these

issues into four main categories:

(1) changing role of direct marketing;

(2) changing cost structures;

(3) changing technology; and

(4) changing market conditions.


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DRIVER #1: THE CHANGING ROLE OF DIRECT

MARKETING

The move to relationship marketing for

competitive advantage.

The decline in the effectiveness of traditional

media.

The overcrowding and myopia of existing sales

channels.


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DRIVER #2: CHANGING COST STRUCTURES

The decline in electronic processing costs.

The increase in marketing costs.

DRIVER #3: CHANGING TECHNOLOGY

The advent of new methods of shopping and

paying. The development of economical methods for

differentiating customer communication.


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DRIVER #4: CHANGING ECONOMIC

CONDITIONS

The desire to measure the impact of

marketing efforts.

The fragmentation of consumer and business

markets.


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Shaw and Stone (1988) noted that companiesgo through evolutionary phases in thedeveloping their database marketing systems.

They identify the four phases of databasedevelopment as:

mystery lists;

buyer databases;

coordinated customer communication; and

integrated marketing.

COMPONENTS OF DATA


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COMPONENTS OF DATA

WAREHOUSING PROCESS: INTERNET

MARKETING TRANSACTIONAL APPLICATIONS: to ensuredata is stored in appropriate format

DATA EXTRACTION AND TRANSFORMATION

TOOLS: to read data for business criticalapplications eg MYSQL

DATA SCRUBBING TOOLS: to detect or removeraw data that maybe inaccurate, out of date,incomplete or inappropriately formatted orreduplicated.


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DATA MOVEMENT TOOLS: to move data fromimmediate to the data warehouse mainlyreferred as ETL(extract, load and transform)

DATA REPOSITORY TOOLS: to maintain meta data(data about the data)

DATA ACCESS TOOLS: to retrieve , view,manipulate , analyse and present data.

DATA DELIVERY : to communicate and deliver ,store and retrieve data safely for the end useraccess


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Database Marketing

A list ofcustomersandprospectsrecords that enables strategic

analysis, and individual selections for communication and

customer service support. The data is organized around the

customer. (Tapp 2005)

Kotler (2003) suggests four examples of when database

marketing is unlikely to be worthwhile:

1. Where the product is a once in a lifetime purchase.

2. Where customers show little loyalty to a brand.3. Where the unit sale is very small.

4. Where the cost of gathering information is too high.


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Database Composition

B2C B2B

Age

Income

BirthdayFamily unit

Location

Interests

Hobbies

Purchasing habits

Volume of previous purchases

Frequency of previous

purchasesProfitability of customer

Credit / debit history

Customers share of

organizations businessBuying practices and patterns


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Online Buyer Behaviour

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